Saks sees a solid first quarter

20 May '08

3 min read

"Our aggregate first quarter sales performance was among the best in the industry as many retailers posted negative comparable store sales for the period. Customers responded to our merchandise selections and incremental promotions which included a more extensive Friends & Family event and the acceleration of a spring season clearance event into the last week of April this year from the first week of May last year." Management estimates that, excluding these promotional changes, comparable store sales for the first quarter would have increased by mid-single digits.

Some of the strongest merchandise categories for Saks Fifth Avenue during the quarter included handbags; shoes; jewelry; and men's apparel, shoes, and accessories.

The New York City flagship store continued to outperform the company average, and several of the Company's newly-renovated stores posted outsized revenues. In the aggregate, the number of transactions increased for the quarter while the average dollars per transaction decreased slightly.

The increased promotional activity negatively impacted the Company's first quarter performance as the gross margin rate decreased by 320 basis points, with approximately 175 basis points of the deterioration related to clearance markdowns accelerated into the first quarter. As a percent of sales, first quarter year-over-year SG&A expense (excluding prior year certain items) was flat.

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